Shell to expand Singapore petrochemical complex

Shell said the expansion will increase the plant's production capacity of alcohol ethoxylate. The investment comes at a time when the traditionally strong Asian petrochemical industry is seeing margins squeezed by a resurgence in investment in US petrochemical plants based on cheaper shale.

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By JACOB GRONHOLT-PEDERSEN

SINGAPORE -- Royal
Dutch Shell on Tuesday announced plans to expand its
petrochemical plant in Singapore to meet rising Asian demand
for specialized chemicals used in detergents and personal care
products.

The investment comes at a time when the traditionally strong
Asian petrochemical industry is seeing margins squeezed by a
resurgence in investment in US petrochemical plants based on
cheaper shale.

Shell said the expansion will increase the plant's
production capacity of alcohol ethoxylate -- mainly used in
detergents and personal care items like shampoo and body wash
-- to 180,000 metric tpy from 40,000 tons.

It didn't provide any financial details, but said all
recently announced projects to upgrade its Singapore
plant will be completed in 2014.

The investment will also allow it to more than triple the
production of high-purity ethylene oxide, which is mainly
processed into ethoxylates, and build a pipeline grid to ship
the chemicals to next-door customers.

"The key driver for this is the move by consumers from
laundry powder and soap bars to liquid detergent and liquid
soaps, especially in major markets like China, India and Southeast Asia," Graham
van't Hoff, executive vice president at Shell Chemicals, told
reporters.

The company expects demand for alcohol ethoxylates in Asia
to grow by 6-7% annually over the next five years.

Shell recently announced plans to boost Singapore production
capacity of olefins and aromatics -- used to make plastic
products and paint -- as well as polyols, used to make
high-quality foams for the furniture and automotive
industries.

In Asia, the petrochemical industry mainly uses
oil-based feedstock, so companies are now
looking anxiously at peers in the US, where the surge of cheap
shale gas has revived the chemical business.

Asian producers are also being pressured by large
investments in refining and petrochemical plants in
the Middle East.

As a result, Mr. van't Hoff said, petrochemicals produced from oil
"will tend to be less competitive than those made of Middle
Eastern or North American gas. But as you get further down the
[value] chain, some of the economics start to shift."

Last year Shell said it plans to build a $2 billion
petrochemical plant in Pennsylvania to draw from the region's
massive deposits of natural gas found in shale rock, but hasn't
yet made a final investment decision.

"We are seeking a balance between investing where the feedstock is and where the consumers
are. And given what we've already got on the ground here [in
Singapore], continuing to invest in the downstream makes good
sense for us."

The feedstock will come from Shell's own
petrochemical plant in Singapore,
which has a production capacity of 800,000 tpy of ethylene
and is integrated with the company's largest fully-owned oil refinery with a capacity of 500,000
bpd.

Dow Jones Newswires

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